The public buildings being advanced to a stage to afford accommodation
for Congress, I offer you my sincere congratulations on the recommencement
of your duties in the Capitol.

In bringing you to view the incidents most deserving attention which
have occurred since your last session, I regret to have to state that several
of our principal cities have suffered by sickness, that an unusual drought
has prevailed in the Middle and Western States, and that a derangement
has been felt in some of our moneyed institutions which has proportionably
affected their credit. I am happy, however, to have it in my power to assure
you that the health of our cities is now completely restored; that the
produce of the year, though less abundant than usual, will not only be
amply sufficient for home consumption, but afford a large surplus for the
supply of the wants of other nations, and that the derangement in the circulating
paper medium, by being left to those remedies which its obvious causes
suggested and the good sense and virtue of our fellow citizens supplied,
has diminished.

Having informed Congress, on the 27th of February last, that a treaty
of amity, settlement, and limits had been concluded in this city between
the United States and Spain, and ratified by the competent authorities
of the former, full confidence was entertained that it would have been
ratified by His Catholic Majesty with equal promptitude and a like earnest
desire to terminate on the conditions of that treaty the differences which
had so long existed between the two countries. Every view which the subject
admitted of was thought to have justified this conclusion.

Great losses had been sustained by citizens of the United States from
Spanish cruisers more than 20 years before, which had not been redressed.
These losses had been acknowledged and provided for by a treaty as far
back as the year 1802, which, although concluded at Madrid, was not then
ratified by the Government of Spain, nor since, until the last year, when
it was suspended by the late treaty, a more satisfactory provision to both
parties, as was presumed, having been made for them. Other differences
had arisen in this long interval, affecting their highest interests, which
were likewise provided for by this last treaty.

The treaty itself was formed on great consideration and a thorough knowledge
of all circumstances, the subject matter of every article having been for
years under discussion and repeated references having been made by the
minister of Spain to his Government on the points respecting which the
greatest difference of opinion prevailed. It was formed by a minister duly
authorized for the purpose, who had represented his Government in the United
States and been employed in this long- protracted negotiation several years,
and who, it is not denied, kept strictly within the letter of his instructions.
The faith of Spain was therefore pledged, under circumstances of peculiar
force and solemnity, for its ratification.

On the part of the United States this treaty was evidently acceded to
in a spirit of conciliation and concession. The indemnity for injuries
and losses so long before sustained, and now again acknowledged and provided
for, was to be paid by them without becoming a charge on the treasury of
Spain. for territory ceded by Spain other territory of great value, to
which our claim was believed to be well founded, was ceded by the United
States, and in a quarter more interesting to her. This cession was nevertheless
received as the means of indemnifying our citizens in a considerable sum,
the presumed amount of their losses.

Other considerations of great weight urged the cession of this territory
by Spain. It was surrounded by the Territories of the United States on
every side except on that of the ocean. Spain had lost her authority over
it, and, falling into the hands of adventurers connected with the savages,
it was made the means of unceasing annoyance and injury to our Union in
many of its most essential interests. By this cession, then, Spain ceded
a territory in reality of no value to her and obtained concessions of the
highest importance by the settlement of long-standing differences with
the United States affecting their respective claims and limits, and likewise
relieved herself from the obligation of a treaty relating to it which she
had failed to fulfill, and also from the responsibility incident to the
most flagrant and pernicious abuses of her rights where she could not support
her authority.

It being known that the treaty was formed under these circumstances,
not a doubt was entertained that His Catholic Majesty would have ratified
it without delay. I regret to have to state that this reasonable expectation
has been disappointed; that the treaty was not ratified within the time
stipulated and has not since been ratified. As it is important that the
nature and character of this unexpected occurrence should be distinctly
understood, I think it my duty to communicate to you all the facts and
circumstances in my possession relating to it.

Anxious to prevent all future disagreement with Spain by giving the
most prompt effect to the treaty which had been thus concluded, and particularly
by the establishment of a Government in Florida which should preserve order
there, the minister of the United States who had been recently appointed
to His Catholic Majesty, and to whom the ratification by his Government
had been committed to be exchanged for that of Spain, was instructed to
transmit the latter to the Department of State as soon as obtained, by
a public ship subjected to his order for the purpose.

Unexpected delay occurring in the ratification by Spain, he requested
to be informed of the cause. It was stated in reply that the great importance
of the subject, and a desire to obtain explanations on certain points which
were not specified, had produced the delay, and that an envoy would be
dispatched to the United States to obtain such explanations of this Government.
The minister of the United States offered to give full explanation on any
point on which it might be desired, which proposal was declined. Having
communicated this result to the Department of State in August last, he
was instructed, notwithstanding the disappointment and surprise which it
produced, to inform the Government of Spain that if the treaty should be
ratified and transmitted here at any time before the meeting of Congress
it would be received and have the same effect as if it had been ratified
in due time.

This order was executed, the authorized communication was made to the
Government of Spain, and by its answer, which has just been received, we
are officially made acquainted for the first time with the causes which
have prevented the ratification of the treaty by His Catholic Majesty.
It is alleged by the minister of Spain that his Government had attempted
to alter one of the principal articles of the treaty by a declaration which
the minister of the United States had been ordered to present when he should
deliver the ratification by his Government in exchange for that of Spain,
and of which he gave notice, explanatory of the sense in which that article
was understood. It is further alleged that this Government had recently
tolerated or protected an expedition from the United States against the
Province of Texas. These two imputed acts are stated as the reasons which
have induced His Catholic Majesty to withhold his ratification from the
treaty, to obtain explanations respecting which it is repeated that an
envoy would be forthwith dispatched to the United States. How far these
allegations will justify the conduct of the Government of Spain will appear
on a view of the following facts and the evidence which supports them:

It will be seen by the documents transmitted herewith that the declaration
mentioned relates to a clause in the 8th article concerning certain grants
of land recently made by His Catholic Majesty in Florida, which it was
understood had conveyed all the lands which until then had been ungranted;
it was the intention of the parties to annul these latter grants, and that
clause was drawn for that express purpose and for none other. The date
of these grants was unknown, but it was understood to be posterior to that
inserted in the article; indeed, it must be obvious to all that if that
provision in the treaty had not the effect of annulling these grants, it
would be altogether nugatory. Immediately after the treaty was concluded
and ratified by this Government an intimation was received that these grants
were of anterior date to that fixed on by the treaty and that they would
not, of course, be affected by it. The mere possibility of such a case,
so inconsistent with the intention of the parties and the meaning of the
article, induced this Government to demand an explanation on the subject,
which was immediately granted, and which corresponds with this statement.

WRT the other act alleged, that this Government had tolerated or protected
an expedition against Texas, it is utterly without foundation. Every discountenance
has invariably been given to any such attempt within the limits of the
United States, as is fully evinced by the acts of the Government and the
proceedings of the courts. There being cause, however, to apprehend, in
the course of the last summer, that some adventurers entertained views
of the kind suggested, the attention of the constituted authorities in
that quarter was immediately drawn to them, and it is known that the project,
whatever it might be, has utterly failed.

These facts will, it is presumed, satisfy every impartial mind that
the Government of Spain had no justifiable cause for declining to ratify
the treaty. A treaty concluded in conformity with instructions is obligatory,
in good faith, in all its stipulations, according to the true intent and
meaning of the parties. Each party is bound to ratify it. If either could
set it aside without the consent of the other, there would be no longer
any rules applicable to such transactions between nations.

By this proceeding the Government of Spain has rendered to the United
States a new and very serious injury. It has been stated that a minister
would be sent to ask certain explanations of this Government; but if such
were desired, why were they not asked within the time limited for the ratification?

Is it contemplated to open a new negotiation respecting any of the articles
or conditions of the treaty? If that were done, to what consequences might
it not lead? At what time and in what manner would a new negotiation terminate?
By this proceeding Spain has formed a relation between the two countries
which will justify any measures on the part of the United States which
a strong sense of injury and a proper regard for the rights and interests
of the nation may dictate.

In the course to be pursued these objects should be constantly held
in view and have their due weight. Our national honor must be maintained,
and a new and a distinguished proof be afforded of that regard for justice
and moderation which has invariably governed the councils of this free
people. It must be obvious to all that if the United States had been desirous
of making conquests, or had been even willing to aggrandize themselves
in that way, they could have had no inducement to form this treaty. They
would have much cause for gratulation at the course which has been pursued
by Spain. An ample field for ambition is open before them, but such a career
is not consistent with the principles of their Government nor the interests
of the nation.

From a full view of all circumstances, it is submitted to the consideration
of Congress whether it will not be proper for the United States to carry
the conditions of the treaty into effect in the same manner as if it had
been ratified by Spain, claiming on their part all its advantages and yielding
to Spain those secured to her. By pursuing this course we shall rest on
the sacred ground of right, sanctioned in the most solemn manner by Spain
herself by a treaty which she was bound to ratify, for refusing to do which
she must incur the censure of other nations, even those most friendly to
her, while by confining ourselves within that limit we can not fail to
obtain their well-merited approbation.

We must have peace on a frontier where we have been so long disturbed;
our citizens must be indemnified for losses so long since sustained, and
for which indemnity has been so unjustly withheld from them. Accomplishing
these great objects, we obtain all that is desirable.

But His Catholic Majesty has twice declared his determination to send
a minister to the United States to ask explanations on certain points and
to give them respecting his delay to ratify the treaty. Shall we act by
taking the ceded territory and proceeding to execute the other conditions
of the treaty before this minister arrives and is heard?

This is a case which forms a strong appeal to the candor, the magnanimity,
and the honor of this people. Much is due to courtesy between nations.
By a short delay we shall lose nothing, for, resting on the ground of immutable
truth and justice, we can not be diverted from our purpose.

It ought to be presumed that the explanations which may be given to
the minister of Spain will be satisfactory, and produce the desired result.
In any event, the delay for the purpose mentioned, being a further manifestation
of the sincere desire to terminate in the most friendly manner all differences
with Spain, can not fail to be duly appreciated by His Catholic Majesty
as well as by other powers. It is submitted, therefore, whether it will
not be proper to make the law proposed for carrying the conditions of the
treaty into effect, should it be adopted, contingent; to suspend its operation,
upon the responsibility of the Executive, in such manner as to afford an
opportunity for such friendly explanations as may be desired during the
present session of Congress.

I communicate to Congress a copy of the treaty and of the instructions
to the minister of the United States at Madrid respecting it; of his correspondence
with the minister of Spain, and of such other documents as may be necessary
to give a full view of the subject.

In the course which the Spanish Government have on this occasion thought
proper to pursue it is satisfactory to know that they have not been countenanced
by any other European power. On the contrary, the opinion and wishes both
of France and Great Britain have not been withheld either from the United
States or from Spain, and have been unequivocal in favor of the ratification.
There is also reason to believe that the sentiments of the Imperial Government
of Russia have been the same, and that they have also been made known to
the cabinet of Madrid.

In the civil war existing between Spain and the Spanish Provinces in
this hemisphere the greatest care has been taken to enforce the laws intended
to preserve an impartial neutrality. Our ports have continued to be equally
open to both parties and on the same conditions, and our citizens have
been equally restrained from interfering in favor of either to the prejudice
of the other. The progress of the war, however has operated manifestly
in favor of the colonies. Buenos Ayres still maintains unshaken the independence
which it declared in 1816, and has enjoyed since 1810. Like success has
also lately attended Chili and the Provinces north of the La Plata bordering
on it, and likewise Venezuela.

This contest has from its commencement been very interesting to other
powers, and to none more so than to the United States. A virtuous people
may and will confine themselves within the limit of a strict neutrality;
but it is not in their power to behold a conflict so vitally important
to their neighbors without the sensibility and sympathy which naturally
belong to such a case. It has been the steady purpose of this Government
to prevent that feeling leading to excess, and it is very gratifying to
have it in my power to state that so strong has been the sense throughout
the whole community of what was due to the character and obligations of
the nation that very few examples of a contrary kind have occurred.

The distance of the colonies from the parent country and the great extent
of their population and resources gave them advantages which it was anticipated
at a very early period would be difficult for Spain to surmount. The steadiness,
consistency, and success with which they have pursued their object, as
evinced more particularly by the undisturbed sovereignty which Buenos Ayres
has so long enjoyed, evidently give them a strong claim to the favorable
consideration of other nations. These sentiments on the part of the United
States have not been withheld from other powers, with whom it is desirable
to act in concert. Should it become manifest to the world that the efforts
of Spain to subdue these Provinces will be fruitless, it may be presumed
that the Spanish Government itself will give up the contest. In producing
such a determination it can not be doubted that the opinion of friendly
powers who have taken no part in the controversy will have their merited
influence.

It is of the highest importance to our national character and indispensable
to the morality of our citizens that all violations of our neutrality should
be prevented. No door should be left open for the evasion of our laws,
no opportunity afforded to any who may be disposed to take advantage of
it to compromit the interest or the honor of the nation. It is submitted,
therefore, to the consideration of Congress whether it may not be advisable
to revise the laws with a view to this desirable result.

It is submitted also whether it may not be proper to designate by law
the several ports or places along the coast at which only foreign ships
of war and privateers may be admitted. The difficulty of sustaining the
regulations of our commerce and of other important interests from abuse
without such designation furnishes a strong motive for this measure.

At the time of the negotiation for the renewal of the commercial convention
between the United States and Great Britain a hope had been entertained
that an article might have been agreed upon mutually satisfactory to both
countries, regulating upon principles of justice and reciprocity the commercial
intercourse between the United States and the British possessions as well
in the West Indies as upon the continent of North America. The plenipotentiaries
of the two Governments not having been able to come to an agreement on
this important interest, those of the United States reserved for the consideration
of this Government the

proposals which had been presented to them as the ultimate offer on
the part of the British Government, and which they were not authorized
to accept. On their transmission here they were examined with due deliberation,
the result of which was a new effort to meet the views of the British Government.
The minister of the United States was instructed to make a further proposal,
which has not been accepted. It was, however, declined in an amicable manner.
I recommend to the consideration of Congress whether further prohibitory
provisions in the laws relating to this intercourse may not be expedient.
It is seen with interest that although it has not been practicable as yet
to agree in any arrangement of this important branch of their commerce,
such is the disposition of the parties that each will view any regulations

which the other may make respecting it in the most friendly light.

By the 5th article of the convention concluded on [1818-10-20], it was
stipulated that the differences which have arisen between the two Governments
with respect to the true intent and meaning of the 5th article of the treaty
of Ghent, in relation to the carrying away by British officers of slaves
from the United States after the exchange of the ratifications of the treaty
of peace, should be referred to the decision of some friendly sovereign
or state to be named for that purpose. The minister of the United States
has been instructed to name to the British Government a foreign sovereign,
the common friend to both parties, for the decision of this question. The
answer of that Government to the proposal when received will indicate the
further measures to be pursued on the part of the United States.

Although the pecuniary embarrassments which affected various parts of
the Union during the latter part of the preceding year have during the
present been considerably augmented, and still continue to exist, the receipts
into the Treasury to the 30th of September last have amounted to $19M.
After defraying the current expenses of the Government, including the interest
and reimbursement of the public debt payable to that period, amounting
to $18.2M, there remained in the Treasury on that day more than $2.5M,
which, with the sums receivable during the remainder of the year, will
exceed the current demands upon the Treasury for the same period.

The causes which have tended to diminish the public receipts could not
fail to have a corresponding effect upon the revenue which has accrued
upon imposts and tonnage during the three first quarters of the present
year. It is, however, ascertained that the duties which have been secured
during that period exceed $18M, and those of the whole year will probably
amount to $23M.

For the probably receipts of the next year I refer you to the statements
which will be transmitted from the Treasury, which will enable you to judge
whether further provision be necessary.

The great reduction in the price of the principal articles of domestic
growth which has occurred during the present year, and the consequent fall
in the price of labor, apparently so favorable to the success of domestic
manufactures, have not shielded them against other causes adverse to their
prosperity. The pecuniary embarrassments which have so deeply affected
the commercial interests of the nation have been no less adverse to our
manufacturing establishments in several sections of the Union.

The great reduction of the currency which the banks have been constrained
to make in order to continue specie payments, and the vitiated character
of it where such reductions have not been attempted, instead of placing
within the reach of these establishments the pecuniary aid necessary to
avail themselves of the advantages resulting from the reduction in the
prices of the raw materials and of labor, have compelled the banks to withdraw
from them a portion of the capital heretofore advanced to them. That aid
which has been refused by the banks has not been obtained from other sources,
owing to the loss of individual confidence from the frequent failures which
have recently occurred in some of our principal commercial cities.

An additional cause for the depression of these establishments may probably
be found in the pecuniary embarrassments which have recently affected those
countries with which our commerce has been principally prosecuted. Their
manufactures, for the want of a ready or profitable market at home, have
been shipped by the manufacturers to the United States, and in many instances
sold at a price below their current value at the place of manufacture.
Although this practice may from its nature be considered temporary or contingent,
it is not on that account less injurious in its effects. Uniformity in
the demand and price of an article is highly desirable to the domestic
manufacturer.

It is deemed of great importance to give encouragement to our domestic
manufacturers. In what manner the evils which have been adverted to may
be remedied, and how far it may be practicable in other respects to afford
to them further encouragement, paying due regard to the other great interests
of the nation, is submitted to the wisdom of Congress.

The survey of the coast for the establishment of fortifications is now
nearly completed, and considerable progress has been made in the collection
of materials for the construction of fortifications in the Gulf of Mexico
and in the Chesapeake Bay. The works on the eastern bank of the Potomac
below Alexandria and on the Pea Patch, in the Delaware, are much advanced,
and it is expected that the fortifications at the Narrows, in the harbor
of NY, will be completed the present year. To derive all the advantages
contemplated from these fortifications it was necessary that they should
be judiciously posted, and constructed with a view to permanence. The progress
hitherto has therefore been slow; but as the difficulties in parts heretofore
the least explored and known are surmounted, it will in future be more
rapid. As soon as the survey of the coast is completed, which it is expected
will be done early in the next spring, the engineers employed in it will
proceed to examine for like purposes the northern and northwestern frontiers.

The troops intended to occupy a station at the mouth of the St. Peters,
on the Mississippi, have established themselves there, and those who were
ordered to the mouth of the Yellow Stone, on the Missouri, have ascended
that river to the Council Bluff, where they will remain until the next
spring, when they will proceed to the place of their destination. I have
the satisfaction to state that this measure has been executed in amity
with the Indian tribes, and that it promises to produce, in regard to them,
all the advantages which were contemplated by it.

Much progress has likewise been made in the construction of ships of
war and in the collection of timber and other materials for ship building.
It is not doubted that our Navy will soon be augmented to the number and
placed in all respects on the footing provided for by law.

The Board, consisting of engineers and naval officers, have not yet
made their final report of sites for two naval depots, as instructed according
to the resolutions of [1818-03-18] and [1818-04-20], but they have examined
the coast therein designated, and their report is expected in the next
month.

For the protection of our commerce in the Mediterranean, along the southern
Atlantic coast, in the Pacific and Indian oceans, it has been found necessary
to maintain a strong naval force, which it seems proper for the present
to continue. There is much reason to believe that if any portion of the
squadron heretofore stationed in the Mediterranean should be withdrawn
our intercourse with the powers bordering on that sea would be much interrupted,
if not altogether destroyed. Such, too, has been the growth of a spirit
of piracy in the other quarters mentioned, by adventurers from every country,
in abuse of the friendly flags which they have assumed, that not to protect
our commerce there would be to abandon it has a prey to their rapacity.

Due attention has likewise been paid to the suppression of the slave
trade, in compliance with a law of the last session. Orders have been given
to the commanders of all our public ships to seize all vessels navigated
under our flag engaged in that trade, and to bring them in to be proceeded
against in the manner prescribed by the law. It is hoped that these vigorous
measures, supported by like acts by other nations, will soon terminate
a commerce so disgraceful to the civilized world.

In the execution of the duty imposed by these acts, and of a high trust
connected with it, it is with deep regret I have to state the loss which
has been sustained by the death of Commodore Perry. His gallantry in a
brilliant exploit in the late war added to the renown of his country. His
death is deplored as a national misfortune.